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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. O'Connell v. Christenson (8/15/2003) sp-5724

O'Connell v. Christenson (8/15/2003) sp-5724

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,


KEVIN O'CONNELL,              )
                              )    Supreme Court No. S-10626
               Appellant,          )
                              )    Superior Court No.
     v.                       )    4FA-98-2708 CI
(F/K/A LUTZ),                 )
               Appellee.      )    [No. 5724 - August 15, 2003]

          Appeal  from the Superior Court of the  State
          of    Alaska,   Fourth   Judicial   District,
          Fairbanks, Charles R. Pengilly, Judge.

          Appearances:  Peter LeBlanc, Cook Schuhmann &
          Groseclose,  Inc., Fairbanks, for  Appellant.
          No   brief  filed  by  Appellee  Kathleen  E.

          Before:    Fabe,  Chief  Justice,   Matthews,
          Eastaugh, Bryner, and Carpeneti, Justices.

          MATTHEWS, Justice.


           Kevin  O'Connell appeals a superior court  order  that

imputed  income to him and modified his child support  obligation

accordingly.  Because the superior court failed to issue findings

sufficient  to justify the imputed income, we vacate the  court's

order and remand the case for further proceedings.


           Kevin  O'Connell  and  Kathleen  Christenson  are  the

parents  of  two children.  O'Connell and Christenson were  never

married  and never resided together with the children.  O'Connell

lives in Anchorage.  Christenson resides near Fairbanks.

           In  May 1999 the superior court awarded sole legal and

primary  physical  custody  of the children  to  Christenson  and

established  a visitation schedule for O'Connell.   In  September

1999  the superior court issued a child custody and support order

setting  out  the child support obligation of the  parties.   The

court  required  O'Connell to pay Christenson $62  per  month  in

child  support  based on a net annual income of $4,605.   At  the

hearing that yielded this order, the court declined Christenson's

request to impute income to O'Connell because, according  to  the

court,  it  lacked a basis for doing so.  The court  did  require

O'Connell  to pay all visitation costs in return for setting  the

child support payment so low.

          The subject of this litigation is a subsequent superior

court  order  issued after Christenson filed a motion  to  change

support  and visitation.  In that motion, Christenson  sought  to

modify  the visitation schedule, impute income to O'Connell,  and

modify   his  child  support  obligation.   O'Connell  filed   an

opposition  to this motion and a cross-motion to modify  custody.

He claimed his adjusted annual income for 2001 was $8,185.38.  In

April 2002 the superior court held a hearing on these motions and

issued  an  order  a few days later.  At the hearing,  the  court

ruled that it would impute an income of $40,000 to O'Connell  and

modify  his child support to reflect this change.  In its  order,

the  court  imputed  an  income of $43,550.13  to  O'Connell  and

calculated  his monthly child support obligation to  be  $714.83.

The  order  also  called for the parties  to  split  equally  the

transportation  costs  for  visitation.   O'Connell  appeals  the

change  in  child  support and the superior court's  decision  to

impute to him an income of $43,550.13.


     A.   Modifying Child Support

            O'Connell  argues  that  the  trial  court  erred  in

modifying  his child support obligation absent a material  change

in circumstances.

          1.   Standard of review

           We  review  a  trial court's decision to modify  child

support for abuse of discretion.1  We find an abuse of discretion

only  when "we are `left with a definite and firm conviction that

a mistake has been made.' "2

          2.   Change of circumstances presumed

           Alaska  Civil  Rule 90.3 permits a modification  of  a

child  support  order  "upon a showing of a  material  change  of

circumstances  as  provided by state law.  A material  change  of

circumstances  will  be presumed if support as  calculated  under

this  rule  is  more than 15 percent greater  or  less  than  the

outstanding support order."3

           Under  the child support order in effect prior to  the

modification, O'Connell was required to pay Christenson  $62  per

month.  The new support obligation as calculated under Rule  90.3

is $714.83 per month.

           Because  the  support as calculated is 1,053%  greater

than the outstanding support order, a change of circumstances  is

presumed.   The  decision to alter child  support  based  upon  a

change  of  circumstances would therefore  not  be  an  abuse  of

discretion   if  the  amount  of  imputed  income  is  justified.

However, because we conclude that the amount of imputed income to

O'Connell  is not supported by adequate findings, we  vacate  the

child support order.

     B.   Imputing Income

           O'Connell  contends that it was error  for  the  trial

court  to impute income to him.  He claims that the court  abused

its  discretion  when the court found that he was  underemployed4

and  when  it  determined  his potential income  without  issuing

findings  in  support of the decision to do so.   O'Connell  also

claims  that the record does not support the trial court's  order

imputing to him an income of $43,550.13.

          1.   Standard of review

           We  review  decisions to impute income  for  abuse  of

discretion.5  The determination of imputed income is a finding of

fact  that  we  will  overturn only if  clearly  erroneous.6   "A

finding is clearly erroneous if it leaves us with a `definite and

firm  conviction  on the entire record that a  mistake  has  been

made.' "7

          2.   The decision to impute income

          Rule 90.3 provides the trial court with the power to

          calculate   child   support   based   on    a
          determination of the potential  income  of  a
          parent  who  voluntarily and unreasonably  is
          unemployed or underemployed. . . .  Potential
          income  will be based upon the parent's  work
          history,     qualifications,     and      job
          opportunities.   The court  also  may  impute
          potential income for non-income or low income
          producing assets.[8]
The  commentary to the rule adds that "[t]he court shall consider

the  totality of the circumstances in deciding whether to  impute

income.   When a parent makes a career change, this consideration

should  include the extent to which the children will  ultimately

benefit  from  the  change."9  The voluntariness  of  a  person's

underemployment should be taken into consideration in determining

whether to impute income.10

           O'Connell claimed that his adjusted annual  income  in

2001  was  $8,185.38, an increase from the past  few  years.   He

stated that he had worked as a commercial fisherman from the  age

of  eighteen until suffering a knee injury in December 1997.  The

court  inquired  into O'Connell's job skills, took  note  of  his

associate's  degree  "in  the  computer  industry,"   and   heard

testimony  relating  to two businesses that  O'Connell  owns:   a

computer business and a collection agency.  The court also  heard

testimony  about  various assets owned by O'Connell  including  a

1988  Corvette,  a  1997  F-150  pickup  truck,  a  nineteen-foot

Bayliner  boat,  two  condominiums in Anchorage,  and  lake-front

property in Big Lake.

           The  comparative plenitude of O'Connell's  assets  may

place  in  question the accuracy of his income  affidavits.   But

whether O'Connell is underemployed ultimately depends on the jobs

available  to  him, given his physical ability and training,  and

what he might earn in such jobs.

          3.   Findings to support imputing income

          A trial court has a duty to enter findings adequate for

rational   appellate  review  when  it  sets  a   child   support

obligation.11   This is no less true with regard to  the  imputed

income  from  which the amount of the obligation is derived.   In

Nass  v. Seaton, we remanded the case to the trial court to  make

more   detailed   findings   and   conclusions   regarding    its

determination of imputed potential income.12  The trial court had

determined  that the father in Nass was voluntarily underemployed

and imputed an income to him of $45,000.13  The court had reached

this  figure  after  citing the father's  "reported  income,  his

potential income, the gifts from his father of $20,000 per  year,

and  the  value  of his extraordinarily low business  and  living

expenses . . . ."14  On appeal, we first determined that  it  was

not  clearly erroneous to find that the appellant was voluntarily

underemployed.15  With regard to imputing income,  we  noted  the

difficulty faced by a court in determining child support  figures

based   upon  the  imputed  potential  income  of  a  voluntarily

underemployed parent.16  Nevertheless, we stated, "on remand it is

incumbent  upon  the  trial court to enter sufficiently  detailed

findings of fact which disclose its methodology, as well  as  the

factual  basis, for its determination of the appropriate  imputed

potential income level for the obligor-parent."17

           In  Olmstead v. Ziegler, we found that the trial court

adequately supported its conclusion that both parents  had  equal

earning  capacities  despite one parent's voluntary  decision  to

change  professions.18  The father in Olmstead  argued  that  the

trial  court had failed to provide explicit findings and a  basis

or calculations for its decision to impute income.19  We responded

by  noting  that the trial court's methodology was clear  -  both

parents  were attorneys and the potential income for  the  parent

leaving  the  legal profession was equal to that  of  the  parent

remaining in legal practice.20

            In  Dunn  v.  Dunn,  we  upheld  a  superior  court's

conclusion that a father was underemployed and the methodology it

used to reach an imputed income for child support purposes.21  The

superior  court  imputed an income of $30,000 to the  father  and

supported   this  decision  with  references  to   the   father's

investments and his home ownership.22  The record also showed that

the father had voluntarily retired, was in his early fifties, and

spent his time building houses.23

           In the instant case, the trial court's order modifying

child support imputed an income of $43,550.13 to O'Connell.   The

court  did not issue written findings.  At the conclusion of  the

testimony  at  the hearing, the court noted that O'Connell  might

earn "about 20,000 a year" if he worked at McDonalds and that  he

was  capable  of doing work substantially more remunerative  than

that.  The court concluded that, "minimally [O'Connell] could  be

expected  to  earn $40,000, if he put himself on the job  market,

and I think that's at the very low end of what could be expected.

I'm  going  to  impute income in the amount  of  $40,000  a  year

.  .  .  ."24   The  court also stated that it  had  "effectively

intended"  to impute income to O'Connell "three years  ago"  when

the  court  imposed  a monthly child support obligation  of  $62,

coupled  with  a requirement that O'Connell pay for  all  of  the

costs associated with visitation.25

            Other  than  the  reference  to  the  possibility  of

O'Connell's  employment  in  the  fast  food  industry  and   its

statement  that  it  would "approach things  in  the  traditional

manner," the court did not provide any rationale for its decision

as  to  the  amount  of imputed income.26  The court's  rationale

appears to be based on an estimation of O'Connell's likely income

were he to abandon his businesses and find employment in the  job

market.   The  court's starting point seems to have been  that  a

person  working at a fast food counter would earn  $20,000  in  a

year.  If a person worked forty hours per week for fifty weeks in

a  year, and earned $10 per hour, that person would have a  gross

annual  income of $20,000.27  However, it is not clear that  fast

food  employees  receive  $10  per hour,  or  that  O'Connell  is

physically  capable of such work.  Most importantly,  it  is  not

clear that employment opportunities exist in Anchorage that would

pay twice this figure to O'Connell.

           Rule 90.3 directs a court imputing potential income to

a  parent  to  base  its determination "upon  the  parent's  work

history,  qualifications, and job opportunities.  The court  also

may   impute  potential  income  for  non-income  or  low  income

producing  assets."28   The  absence of  specific  findings  that

justify  imputing  either  $40,000 or  $43,550.13  of  income  to

O'Connell  renders  it  impossible for this  court  to  determine

whether  the  court  was  clearly  erroneous  in  its  imputation

decision.  For this reason, we vacate the child support award and

remand  the question of imputed income.  On remand the court  may

impute  income to O'Connell in an amount supported by appropriate

findings as to O'Connell's physical abilities and qualifications,

the employment opportunities available to him, and what he should

earn  from  them.  The court may find it useful to refer  to  the

Alaska  Department  of  Labor  wage statistics  for  guidance  in

determining  the  amount of income to impute to  O'Connell.   The

Child  Support  Enforcement  Division (CSED)  sometimes  utilizes

these  statistics to determine a parent's total income  from  all

sources.29   The  court  is authorized  to  hold  a  supplemental

evidentiary hearing if, in its discretion, it believes that  such

a hearing will be necessary or useful.


           We  VACATE  the  child support  order  issued  by  the

superior  court  and REMAND the case for further  proceedings  in

accordance with this opinion.

1Olmstead v. Ziegler, 42 P.3d 1102, 1104 (Alaska 2002).
2Id.  (quoting  Schuyler  v. Briner, 13  P.3d  738,  741  (Alaska
3Alaska R. Civ. P. 90.3(h)(1).
4O'Connell notes that the trial court's order does not state that
the  court  found him to be underemployed.  He makes  this  claim
assuming  that such a finding is implicit in the court's decision
to impute income.
5See Rhodes v. Rhodes, 754 P.2d 1333, 1335 (Alaska 1988).
6Lacher  v. Lacher, 993 P.2d 413, 423 n.34 (Alaska 1999)  (citing
Dunn v. Dunn, 952 P.2d 268, 270 (Alaska 1998)).
7Dunn, 952 P.2d at 270 (quoting R.F. v. S.S., 928 P.2d 1194, 1196
n.2 (Alaska 1996)).
8Alaska R. Civ. P. 90.3(a)(4).
9Alaska R. Civ. P. 90.3 cmt. III.C.
10See Robinson v. Robinson, 961 P.2d 1000, 1004 (Alaska 1998).
11See,  e.g., Berkbigler v. Berkbigler, 921 P.2d 628, 631 (Alaska
1996);  Waggoner  v. Foster, 904 P.2d 1234, 1235  (Alaska  1995);
Adrian v. Adrian, 838 P.2d 808, 811 (Alaska 1992).
12904 P.2d 412, 418-19 (Alaska 1995).
13Id. at 417 & 418 n.12.
15Id. at 417.
16Id. at 418-19.
17Id. at 419.
1842 P.3d 1102, 1106-07 (Alaska 2002).
20Id. at 1107 n.16.
21952 P.2d 268, 271 (Alaska 1998).
24In the order there is no explanation for the increase in imputed
income  from  $40,000 to $43,550.13 between the hearing  and  the
order.  The child support affidavit filed by O'Connell in January
2002 lists rental income in the amount of $1,650.13 and an Alaska
Permanent  Fund Dividend in the amount of $1,850.  These  figures
add  up  to  $3,500.13.   The court likely  imputed  income  from
O'Connell's labor to be $40,000 and added the rental  income  and
dividend.  This would account for all but $50 of the discrepancy.
However, this possible explanation is only a guess.
25The  transportation  costs were substantial  given  O'Connell's
residence  in Anchorage, Christenson's residence near  Fairbanks,
and a requirement that the children only be transported by air.
26The  court  did further describe the compromise in its  earlier
order  that set child support at the poverty level in return  for
O'Connell  agreeing  to accept the expense  of  visitation.   The
court  then  ordered  that  henceforth  the  parents  will  split
visitation costs.
27The adjusted annual income on which child support is based would
be somewhat less.  See Alaska R. Civ. P. 90.3(a)(1).
28Alaska R. Civ. P. 90.3(a)(4).
2915  AAC 125.050(a) provides that when CSED is unable to  obtain
accurate  financial information "the agency  will  use  the  best
information available, including any information available to  it
through automated sources such as information maintained  by  the
Department  of Labor and Workforce Development, to determine  the
parent's total incomes from all sources."  Another section of the
regulations  that  specifically  relates  to  imputing  potential
income for individuals determined to be voluntarily unemployed or
underemployed  directs  CSED to "determine  potential  income  by
considering,  based on available information, the  parent's  past
income,  skills,  work  history,  and  education,  and  the   job
opportunities  in the area where the parent physically  resides."
15 AAC 125.020(b).